In June, 2015, the United States Supreme Court declined to review the Ninth Circuit Court of Appeals holding in Alaska Comm. Action on Toxics, et al. v. Aurora Energy Services. The Supreme Court’s denial came after Aurora and the Alaska Railroad Corp. petitioned the Court for review, asking the Court to reverse the Ninth Circuit’s holding that they said improperly narrowed the Clean Water Act’s (“CWA”) permit shield to allow citizen suits over discharges of pollutants not specified in a NPDES permit.

NPDES Permits Under the CWA

By way of background, Section 301(a) of the CWA prohibits the “discharge of any pollutant” from “any point source” into “navigable waters” unless the discharge complies with certain other sections of the CWA. One of those applicable sections is section 402, which provides for the issuance of National Pollutant Discharge Elimination System (“NPDES”) permits. In nearly every case, an NPDES permit is required before anyone may lawfully discharge a pollutant from a point source into navigable waters.

If a pollutant discharger has obtained and complied with a NPDES permit, then they are protected by what is known as the permit shield. The permit shield protects pollutant dischargers from liability under the CWA, even if the Environmental Protection Agency (“EPA”) promulgates more stringent limitations over the life of the NPDES permit. However, any violation of the permit’s terms constitutes a violation of the CWA.

Pursuant to section 402, there are two types of NPDES permits: individual and general. An individual NPDES permit authorizes a specific entity to discharge a pollutant in a specific place and is issued after an informal agency adjudication process. By contrast, a general NPDES permit is issued for an entire class of hypothetical dischargers in a given geographical region and is issued pursuant to administrative rulemaking procedures.

Once a general NPDES permit has been issued, an entity seeking coverage must submit a “notice of intent” to discharge pursuant to the permit. The date on which coverage commences depends on the terms of the particular general NPDES permit, and, in some cases, the permit issuer may require a potential discharger to apply for an individual permit.

Multi-Sector General Permit for Stormwater Discharges Associated with Industrial Activity

As it relates to the Alaska Comm. Action case, a NPDES permit is required for stormwater discharges associated with industrial activity. Under current EPA regulations, “stormwater” is defined as “storm water runoff, snow melt runoff, and surface runoff and drainage.” “Storm water discharge associated with industrial activity” is defined as “the discharge from any conveyance that is used for collecting and conveying storm water and that is directly related to manufacturing, processing or raw materials storage areas at an industrial plant.”

At issue in the Alaska Comm. Action case was the Multi-Sector General Permit for Stormwater Discharges Associated with Industrial Activity, first issued in 1995 and since reissued in 2000 and 2008. Specifically, the Ninth Circuit was asked to decide whether defendants’ alleged non-stormwater discharge of coal from the Steward Facility’s conveyor system and ship loading area into Resurrection Bay is covered by a general permit.

The Seward Coal Loading Facility is located on the northwest shore of Resurrection Bay in Seward, Alaska. Defendant Alaska Railroad Corp. purchased the Seward Facility in 2003. The facility has been operated by Defendant Aurora Energy Services since 2007. The facility’s purpose is to receive coal by railcar from the Usibelli Coal mine located in close proximity to Healy, Alaska, and to then transfer that coal onto ships for delivery to out-of-state markets.

Plaintiffs’ Three Claims

The plaintiffs in this case claimed that defendants’ improperly discharged coal into the bay in three different ways: (1) coal falls into the Bay, either directly or as coal dust, during the over-water transfer of coal from the stockpiles to the ship holds; (2) coal dust generated at the stockpiles, and other land-based areas of the Facility, migrate to the Bay as airborne dust; and (3) coal-contaminated snow is intentionally plowed into the Bay and into a pond and wetlands north of the facility.

History of the Seward Facility General Permit

In 1984, the EPA issued the facility its original NPDES permit. In 1999, when it came time to renew their NPDES permit, the EPA advised the facility that its discharges could be regulated under either an individual permit or under the NPDES Multi-Sector General Permit for Stormwater Discharges Associated with Industrial Activities. In 2001, the facility switched from its individual NPDES permit to the general permit.

In 2009, the facility renewed its general permit. As a precondition to coverage under the general permit, the facility was required to have developed and implemented a Storm Water Pollution Prevention Plan.

In early February 2010, the EPA and the Alaska Department of Environmental Conservation (“DEC”) conducted a site inspection of the Seward Facility. The purpose of the inspection was to “ensure that water quality standards and permit requirements [were] being met.” A significant portion of the inspection report focuses on the coal that enters the Bay from the ship loader area and conveyer belt, and the coal dust the Facility generates. No violations of the General Permit, the Prevention Plan, or water quality standards generally, were reported. In August 2011, the Facility was inspected again. Again, no violations were reported.

Ninth Circuit Disagrees that Seward Facility Was Not in Violation of NPDES Permitting Requirements

However, in its opinion, the Ninth Circuit disagreed that the facility had not violated the parameters of the general permit, determining that: 1) the plain terms of the general permit prohibited defendants’ non-stormwater discharge of coal; 2) the court’s analysis was controlled by Part 2.1.2.10 of the general permit, which prohibited the discharges; 3) the court would have reached the same conclusion had it employed the permit shield analysis that has been applied to individual permits; and 4) the district court erred in concluding that the general permit shielded defendants from liability for their non-stormwater coal discharges.

According to the Ninth Circuit:

The plain terms of the General Permit prohibit defendants’ non-stormwater discharge of coal. In Part 2.1.2.10, the General Permit states: “You must eliminate non-stormwater discharges not authorized by an NPDES permit. See Part 1.2.3 for a list of non-stormwater discharges authorized by this permit.” The referenced section (which is actually Part 1.1.3) lists eleven categories of non-stormwater discharge which are “the non-stormwater discharges authorized under this permit.” None of these categories cover defendants’ coal discharge.

The Ninth Circuit rejected the defendants’ arguments that the list contained in Part 1.1.3 was not meant “to circumscribe the universe of authorized non-stormwater discharges.” There, the court said:

The section cited by defendants, for instance, governs Sector A, pertaining to timber products facilities. The Seward Facility is classified under Sector AD. This sector does not pertain to any particular industry, but rather is a catchall category for “facilities designated by the Director as needing a stormwater permit, and any discharges of stormwater associated with industrial activity that do not meet the description of an industrial activity covered by Sectors A-AC.” Unlike sections governing other sectors, the section governing Sector AD does not specify additional categories of non-stormwater discharge that are authorized or prohibited. With the possible exception of additional monitoring or reporting requirements that may be imposed, Sector AD facilities are governed only by the permit’s general provisions.

In sum, the court concluded, “Defendants’ non-stormwater coal discharges are not on this list, thus they are plainly prohibited.”

Ninth Circuit Would Have Reached Same Conclusion Under “Permit Shield” Analysis

Having determined that the general NPDES permit did not allow defendants’ coal discharges, the court stated that it would have reached the same result as if the court had employed the permit shield analysis used in the context of individual permits. In the court’s view:

Under that analysis, a permittee is shielded from liability under the CWA if it (1) complies with the permit’s express terms, and (2) discharges pollutants that were disclosed to and within the reasonable contemplation of the permitting authority during the permitting process. Here, the express terms of the General Permit prohibit defendants’ non-stormwater coal discharges, thus defendants would not be shielded from liability. As our outcome would be the same regardless of whether Piney Run’s analysis applies to general permits, we need not decide whether it does.

Following the Ninth Circuit’s decision, the defendants appealed the decision to the United States Supreme Court. However, as noted at the outset, the Supreme Court declined to hear their case. The case will now proceed back to the lower district court for further proceedings.